Here’s How Tech is Disrupting the Traditional Healthcare Market

Tech is rapidly shaking up the traditional healthcare market in ways that could be described as both exciting and terrifying. Fortunately for investors, these disruptions are also creating new opportunities to solve some of the biggest health-related challenges facing the world today.

The following infographic from MW Homecare shows how healthcare is being impacted by emerging technologies and startup companies.

Healthcare: the big picture

Today’s healthcare industry faces many hurdles that are driving up costs. Political and economic uncertainty, an aging population, and a growing prevalence of chronic diseases are all contributing factors in the global push to find more cost-effective healthcare solutions.

The entire healthcare industry, from insurance providers to drug manufacturers, is seeking opportunities to reduce costs through modern technologies. This is playing into a wider trend towards a more personalized and efficient approach to healthcare. For investors, some of the most interesting crossroads between technology and healthcare may be found in big data, cybersecurity, developing markets, and strategic partnerships.

Big data

The collection and storage of large amounts of medical data, made possible by recent technological advancements, is helping healthcare professionals improve the quality of medical care, from research to diagnosis and treatment.

Investor interest in digital health startups that use big data to improve the efficiency and effectiveness of healthcare is increasing. These companies attracted $5.8 billion in funding in 2015, according to CB Insights – an increase of 20% over the previous year.

Cybersecurity

While technology is disrupting the healthcare industry in many positive ways, it’s also creating new challenges that will need to be addressed with greater urgency moving forward. One issue is the world’s growing reliance on cloud-based technology, which can place personal medical data at risk of security breaches.

Cyberattacks and IP theft are a growing threat to healthcare companies. According to Deloitte’s 2016 Global Life Sciences Outlook, in 2011 the U.K. government claimed that its life sciences and healthcare industry suffered $2.9 billion in losses due to IP theft.

Investment into cybersecurity technology has grown by 235% over the last five years, reaching a total of $3.9 billion in 2015 alone, according to CB Insights.

Developing markets

Currently, each country has its own complex regulatory and compliance systems which act as gatekeepers in the development of medical products. While these systems are necessary in order to ensure the safety and credibility of products before they go to market, they often clash with technology’s rapid pace of innovation.

Although the U.S. has been a leader in health tech innovation, current regulatory and compliance models tend to hold back progression. Digital health companies face heavy regulations in the U.S., which is causing investors to seek out new opportunities in developing markets such as China and India – two nations facing extreme healthcare costs against a backdrop of large aging populations and a rapid increase in chronic diseases such as cancer and diabetes.

China, with more than 185 million residents currently over the age of 60, is set to become the world’s most aged society by 2030. The Chinese government has responded to this looming economic threat by opening up opportunities for private foreign investment into its healthcare sector. As part of China’s recently implemented 13th Five-Year Plan, foreign senior care operators are now permitted to set up wholly–foreign owned enterprises (WFOE) in China, and are eligible to receive tax incentives, administrative fee exemptions and deductions and waivers. Chinese health companies are also seeking opportunities in foreign health technologies that will help China meet its domestic healthcare needs.

Strategic Partnerships

A trend that has been occurring with more frequency in recent years is the establishment of partnerships between tech giants and healthcare startups. For example, by partnering with Epic Systems in 2014, Apple’s Healthkit platform was able to integrate substantial amounts of patient data to leverage its digital health and tracking technologies.

Mergers and acquisitions within the digital health tech space have also been steadily growing over the last few years. In fact 2016 has been a record-breaking year for digital health tech M&A, with 41 deals in total – a solid increase over 2015’s total of 36 deals and 2014’s total of 33 deals. Many of these mergers and acquisitions are strategic moves by healthcare retail companies looking to build up their marketing presence and customer interaction platforms.

As technology continues to act as a catalyst for rapidly changing market dynamics within the healthcare industry, it is likely that strategic partnerships, co-investments, and M&A will continue to be key drivers of growth.